NPCI reportedly plans MDR on select UPI merchant payments above ₹2,000 from Oct 15
Business Today reports a 0.4% MDR, capped at ₹300, on eligible P2M UPI payments above ₹2,000, with exemptions for low-value transactions and certain small merchants. Retailers would need to absorb the charge, as consumer pass-through is reportedly barred.
What happened
NPCI will introduce merchant-side MDR on select UPI P2M payments above ₹2,000 from October 15, 2026. Retailers face 0.4% fees capped at ₹300, while small P2PM
Key facts
- MDR effective October 15, 2026
- 0.4% MDR on eligible P2M UPI transactions above ₹2,000
- ₹300 maximum MDR for transactions of ₹75,000 and above
- ₹12 MDR on a ₹3,000 payment
- ₹200 MDR on a ₹50,000 payment
- ₹5 flat MDR for designated essential sectors above ₹2,000
- 0.02% MDR for capital-market transactions, capped at ₹300
- P2PM merchants exempt up to ₹1 lakh monthly UPI QR receipts
- 5% of MDR collections allocated to small merchant support fund
- UPI processed 2,451 crore transactions worth ₹29.9 lakh crore in August 2026
Why this matters
Potential MDR on higher-value UPI transactions may increase the strategic value of payment-routing, acquiring, and checkout partners that can help retailers manage acceptance costs, subject to regulatory confirmation.
What to watch
- Formal NPCI circular, RBI communication or government statement confirming whether MDR will apply from Oct. 15.
- Final definition of eligible P2M transactions, merchant-size thresholds, category exclusions and treatment of QR versus intent/collect payments.
- Whether banks, PSPs or payment aggregators absorb part of the fee rather than passing the full charge to merchants.
- Merchant-association response and evidence of payment steering toward cards, EMI, net banking or cash for baskets above ₹2,000.
- Changes in UPI transaction-value mix, high-ticket UPI conversion rates and retailer payment acceptance costs after any rollout.
- Model exposure by merchant category using the share of UPI P2M payments above ₹2,000, average ticket size and current payment mix.
- Seek written clarification from acquiring banks, PSPs and payment aggregators on eligible transaction types, merchant-category exemptions, settlement treatment and effective date.
- Renegotiate acquiring and gateway contracts, including blended-rate caps, volume rebates and routing flexibility for high-value UPI transactions.
- Prepare compliant customer-payment messaging and test non-surcharge alternatives such as payment-method-linked offers, loyalty rewards, EMI promotion and bank-transfer incentives.
- Review gross-margin impact for high-ticket SKUs and incorporate potential MDR into holiday-season promotional, pricing and assortment plans.